Legislators Continue Holding the Unemployed Hostage

Legislators in several states have recently displayed a shameful eagerness to hold unemployment benefits hostage as a means of enacting measures to advance an anti-middle-class agenda and undermine key worker protections.

In Michigan, Missouri and now in North Carolina, simple legislative provisions allowing federally-paid extended benefits to continue have been blocked until amendments were attached cutting either basic state unemployment insurance benefits or forcing massive state budget cuts.

These recent instances harken back to late last year, when a one-year reauthorization of federal emergency and extended unemployment insurance programs was blocked in the U.S. Congress. Those federal unemployment insurance programs had provided critically-needed help to more than 9.5 million workers and their families during 2010. But, their reauthorization was held up by a then-minority in Congress, until a deal was struck to include a two-year extension of existing tax rates. To be more precise, the unemployment benefits reauthorization was, as the New York Times editorial put it“held hostage, again,” until the tax cuts for people making more than $1 million a year were included in the deal.

Now, a provision in the federal reauthorization of those benefits allows states receiving full federal funding for Extended Benefits payments to continue those programs by comparing their unemployment rates to the same period three years ago rather than just two years – a simple technical fix. That adjustment has been enacted already, as it should be, without needless delay or serious complication, in many states including Idaho, Delaware, Minnesota, Ohio, Maine, California, Colorado, Kentucky, Massachusetts, New Mexico, New York, Oregon, Washington, West Virginia, Illinois and Indiana. Similar measures have passed and are awaiting their Governor’s signatures in Rhode Island and New Jersey.

Those states put the needs of workers and their families, struggling to find work in a tight job market, rightly ahead of any political or ideological agendas, and passed the needed adjustments before long-term jobless workers faced a cut-off of extended benefits.

But when Michigan risked becoming the first state to fail to act before the two-year unemployment rate comparison forced the state to trigger “off” of extended benefits, the controlling majority in the legislature, under pressure from the Michigan Chamber of Commerce, first opposed taking any action -- threatening to cut-off benefits to 35,000 jobless Michigan workers. Faced with mounting pressure to act, and a public outcry that included more than 10,000 letters and emails to legislators and state officials, many from Unemployedworkers.Org blog readers, legislators devised a scheme – promulgated by the Michigan Chamber – to allow the extended benefits fix to pass, but amend it to cut back the maximum weeks of regular state unemployment benefits from the national standard of 26 weeks to 20 weeks.

When the legislature passed that amended measure, andMichigan Governor Rick Snyder signed it, Michigan became the first state in the country to provide less than 26 weeks of state benefits eligibility. And thus were federal, temporary extended benefits for 2011 held hostage to enact a permanent undermining of the basic state unemployment insurance program now set to take effect January 15, 2012 in Michigan.

In Missouri, meanwhile, legislation to allow federal extended benefits to continue had easily passed the state House with bipartisan support back on February 1st. But a group of four State Senators led by Jim Lembke (R-1), and including Senators Brian Nieves (R-26), Rob Schaaf (R-34) and Will Kraus (R-8), filibustered the bill in the Senate and kept it from coming to a vote. For two months they misled constituents about the benefits, and hurled a stream of insults at unemployed workers. They said they were opposing the extended benefits to protest federal spending – in this case $105 million for jobless workers, an amount equal to 0.002 percent (that’s two one-thousandths of a percent) of the federal budget.

Sen. Nieves wrote in response to an email criticizing his obstruction of unemployment benefits, saying:

I am simply standing in the way of us receiving additional, unbudgeted dollars that the federal government has to barrow [sic] from China to be able to send to us.

… I cannot be a part of expanding our dependence on the federal government at a time when the federal government literally has NO money other than what they barrow [sic] from China. We cannot give people in Missouri an expansion of government benefits that are paid for with Chinese Yen.

(Chinese Yen?)

The filibuster by Lembke, Nieves and company continued through the week ending April 2nd, causing the abrupt cut-off of extended benefit payments to nearly 10,000 unemployed Missouri workers. The legislators’ obstruction stirred such a resoundingly negative reaction that tens of thousands of workers sent faxes, emails, letters and made phone calls – 20,000 through Unemployedworkers.Org alone – calling on the Senators to drop their filibuster or for Senate leaders to bring it to an end.

On the morning of Wednesday, April 6 Lembke said he’d had enough, telling the Associated Press he would abandon the filibuster and allow a vote on the extended benefits bill. Not so fast, though, said the Missouri Chamber of Commerce, whose lobbyists had been working behind the scenes to craft an amendment that would cut state unemployment benefit weeks from 26 to 20 – similar to the one enacted in Michigan, but one that would take effect immediately upon passage.

In order to make it appear that the provision to permanently cut state benefit weeks was necessary in order to pass the temporary extended benefits fix, Chamber lobbyists and Senate majority leaders agreed that the Lembke-led filibuster must continue. A hastily-called press conference was arranged that same day, where the filibustering Senators were joined by Senate President Rob Mayer to announce that the filibuster would continue while they worked toward a broader “deal” to cut federal funds in an unrelated budget appropriations measure.

No mention was made of the already-crafted, Chamber of Commerce-backed amendment to cut state benefit weeks until the Senate took a procedural break during the continuing benefits filibuster the next day. After the break, Lembke announced they would drop the filibuster as part of a “deal” to find the federal spending cuts elsewhere – and to allow an amendment offered by Sen. Mike Kehoe (R-6) to reduce the maximum state benefit weeks to 20. Sen. Kehoe is a member of the board of directors of the Missouri Chamber of Commerce, which took credit for the amendment. It passed the Senate on a voice vote.

The ongoing filibuster, thus,provided the cover to pass the cut to state benefit weeks – once again holding the long-term unemployed hostage to enact permanent state cuts to the basic unemployment insurance program. The claim by the Chamber of Commerce that the state benefit cuts were essential “in gaining support and passage of the bill” – and to appease the filibustering Senators -- was shown to be fallacious by the vote on the bill itself: the formerly filibustering four all voted against it anyway, and those voting in favor had supported the bill before the insertion of the state benefit cuts.

Legislative leaders and Chamber of Commerce officials were quick to call the outcome a “compromise” – but the only things that were compromised were the benefits of unemployed workers. And the cuts won’t just mean fewer weeks of regular state benefits for laid-off Missouri workers now filing new initial claims. Because of the way that federal benefit eligibility is calculated – based on the maximum regular state weeks offered – new claimants who exhaust the now 20 weeks of state benefits will also be eligible for fewer federal benefits. (see the chart below)

Impact of Unemployment Insurance Benefits Proposals on Number of Weeks Available

Current

Reduced State Benefits

Change

Regular State Benefits

26

20

-6

Emergency Unemployment Compensation (EUC)

Tier I (Lesser of 20 weeks or 80% of maximum # weeks)

20

16

-4

Tier II (Lesser of 14 weeks or 54% of maximum # weeks)

14

10

-4

Tier III (Lesser of 13 weeks or 50% of maximum # weeks)

13

10

-3

Tier IV (Lesser of 6 weeks or 24% of maximum # weeks)

6

4

-2

Total EUC

53

40

-13

Extended Benefits (Lesser of 20 weeks or 80% of maximum # weeks)

20

16

-4

Total

99

76

-23

Legislators in both Missouri and Michigan appeared to be completely unaware of the additional cuts laid-off workers in their states could face.

Undeterred, the Missouri Chamber of Commerce has been busy trying to spin the state benefits cut as a “tax cut”. As reported by the St. Louis Beacon, Chamber president Daniel P. Mehan said the state benefits cut would:

“reduce government imposed taxes on employers by as much as $124 million annually. The Missouri Chamber of Commerce and Industry is proud to have negotiated this historic tax cut."

Missouri employers could see a reduction in the costs of unemployment insurance by as much as 23 percent, Mehan said. "This tax cut can be used directly by businesses to create and retain jobs in Missouri.”

But as Chamber officials should know, cutting unemployment insurance payments does not readily result in lower employer taxes. Even in normal economic times it would take several years for benefit reductions to translate into lower unemployment taxes. And under the extraordinarily tough current conditions, with persistent high unemployment and a state unemployment insurance trust sorely in need of funds to restore solvency, any tax reductions would likely be many years off.

This is no “tax cut” – it’s a benefits cut, pure and simple.

And when Missouri Chamber of Commerce members realize they’re not likely to see their unemployment taxes lowered by these benefit cuts – well, the current Chamber leaders may have some explaining to do.

Which brings us to North Carolina, where legislators have taken a new approach to holding long-term jobless workers -- and their benefits -- hostage. A bill to allow 37,000 North Carolina workers to continue to receive federal extended benefits was hijacked last week by majority legislators, who appended a provision that would trigger a 13% cut in the $19.9 billion state budget – gutting vital services for middle-class and low-income families, students, workers and seniors throughout the state.

Governor Bev Perdue rightly vetoed the hijacked bill calling it “extortion”. In a state that’s just been ripped by killer tornadoes, a lengthy editorial in the Greensboro News-Recordtoday concluded:

A budget should not be approved by attaching it to an unrelated bill -- in this case, unemployment benefits. Republicans intentionally created a dilemma for the Democratic governor -- enact this budget, or else watch as 37,000 people out of work go without their checks. When she said no to the budget, Senate leader Phil Berger said, in words as slashing as 150 mph winds -- that "Republicans voted to extend unemployment benefits and prevent a government shutdown, but the governor is too addicted to state spending to support either of those efforts. She should be ashamed of herself."

No, given her choices, she shouldn't.

The unemployment benefits were used as bait. The budget measure was the trap.

The editors urged legislators to send Gov. Perdue "a bill to extend jobless benefits with no budget traps attached. People who've lost their jobs should not be made victims of a preventable political storm."